The Department of Social Security (DSS) makes, or has made in the past, a number of payments for aged people, people with disabilities and carers. This paper traces the history of each of these payments from their introduction to the present day.

Each section of the paper includes an introductory commentary to put the various payments into a broader context. A series of chronologies setting out the changes over time to each of the major payments treated follows. This paper is not a definitive treatment of the history of social security in Australia. It is a reference tool for those needing to locate specific changes quickly and place them in their chronological context.

The date from which measures take effect has been used to date changes. This means that certain measures shown to be introduced by one Government may have been legislated for under the previous Government. Where changes have been recently announced but not passed into law by the Parliament, they are placed according to the expected date of effect. Many measures of only moderate interest and minor administrative modifications to payments have not been included.

Rates of payment are generally not given in the text, but can be found in the tables. In the text, imperial currency is used until 1966 and decimal currency is used after that date. In the tables decimal currency is used throughout.

Note on Sources and further reading

In addition to the Commonwealth Budget Papers and Social Security legislation, the following publications have been used in the preparation of this paper:

At federation in 1901 the Constitution of the Commonwealth of Australia gave power to the Commonwealth Government to legislate for invalid and old-age pensions. This was a power held concurrently with the States. A Royal Commission on Old-age Pensions was conducted during 1905-6 and legislation for both age and invalid pensions was passed in 1908 during the Deakin administration. Several states had already been active in this area. New South Wales (NSW) had introduced a non-contributory old age pension scheme in 1900. The only other non-contributory schemes then in existence were those established in New Zealand in 1898 and Denmark in 1891. Some other countries had voluntary contributory schemes and Germany had a compulsory contributory scheme. The NSW scheme provided statutory entitlements rather than offering payments at the discretion of a government official or charitable body, as had most earlier welfare measures. Victoria also established an age pension at about the same time, but it was a rather more limited and discretionary scheme. By the time the Commonwealth Old Age and Invalid Pensions became available in 1909 and 1910, NSW had also introduced invalid pensions and Queensland had established age pensions, both in 1908.

1908 was the also the year in which the Asquith Liberal Government began the development of age pensions in the United Kingdom by legislating for non-contributory age pensions for people aged 70 years or more. It was not until 1925 that age pensions were extended on a contributory basis for those aged 65 to 70 years. The United States took even longer to act at a national level. In 1935 an insurance-based old age pension scheme was introduced after some state old age assistance schemes had been established in the early thirties. By 1940 Australia was one of about thirty five countries with social security programs for the aged and the disabled. By 1997 at least 166 countries of the 185 in the United Nations had some sort of program in this area(1).

The Australian pensions were modelled in part on the New Zealand scheme and were similar to the NSW scheme. The pensions were non-contributory, non-discretionary and means tested. They were available from the age of 65 years for men and 60 years for women. Unlike most other OECD countries, Australia has never adopted a government run social insurance scheme. Such schemes usually involve compulsory contribution from employers and employees and offer benefits which relate to the previous income levels of participants. There was not from lack of interest in social insurance in Australia. The Cook Government in 1913, the Bruce/Page Government in 1928 and the Lyons Government in 1938 all examined such schemes. Legislation was introduced into Parliament in 1928 and 1938 for national insurance schemes covering a wide range of benefits. On both occasions widespread opposition to the contributory features of the schemes prevented implementation. The Menzies Government initially favoured a contributory scheme as a way of getting rid of the pension means test, but by 1954 it had been rejected as impractical. A contributory pension scheme was temporarily revived as a policy option in the early seventies by the ALP, but has not been seriously considered since then. The spread of private superannuation in the last ten years appears to have pushed social insurance completely off the agenda in Australia. Private superannuation has many of the features of a government run social insurance scheme while limiting government involvement. It provides a government mandated framework for private saving for retirement which features employer contributions and earnings related benefits.

The Disability Support Pension Replaces Invalid Pension

The Invalid Pension was essentially unchanged from its introduction until 1991 when it was replaced by the Disability Support Pension. The change was prompted by the need for a more active approach to income support for people with disabilities. Since the seventies the numbers of invalid pensioners had grown steadily due in part to increased levels of unemployment which had made it harder for people with disabilities to compete for jobs. The direction of change was set by the Cass Review of the social security system in the late eighties. It recommended a shift from the Invalid Pension where qualification depended upon 'permanent incapacity to work' to a system which provided access to employment programs and an emphasis on rehabilitation and a return to self-sufficiency where practical.

From April the Old-age Pension (AP) was payable to people who were aged 65 years and over, or were aged 60 years and over and were permanently incapacitated for work.

Groups excluded from eligibility were those living overseas, 'aliens', those naturalised for less than three years, overseas born 'asiatics', and 'aboriginal natives' of Australia, Africa, The Pacific Islands or New Zealand. Applicants for AP were required:

to be residing in Australia when claiming a pension

to have continuously resided in Australia for at least 20 years (absences of up to one tenth of the total period of residence were not taken to interrupt the continuity of residence)

to be of good character

to have not deserted or failed to maintain their wife (if a husband) or deserted their husband (if a wife), in the preceding five years, without just cause, and

to have not deserted (if a mother) or failed to maintain (if a father) any children under 14 years of age, in the preceding five years.

The pension was means tested.

Pensions could be paid to institutions, organisations or other persons where a pensioner was considered unfit to be entrusted with a pension.

Fisher, ALP

1910

From November a section of the original Act providing for pension eligibility at 60 years of age for women commenced to take effect.

Fisher, ALP

1912

From December naturalised residents no longer had to wait three years to be eligible for pension.

Fisher, ALP

1926

Indians born in British India became eligible for pensions.

Bruce-Page, Nationalist-CP

1931

From July pension rates were reduced, as part of the emergency financial measures taken during the Depression.

Scullin, ALP

1933

From October the rate of pension began to be reviewed annually based on the retail price index.

Lyons, UAP

1937

From September annual review of pension rates ceased.

Lyons, UAP-CP

1940

From December automatic quarterly rate adjustment based on the retail price index commenced.

Menzies, UAP-CP

1941

From December all 'asiatics' who were British subjects became eligible for pension.

Curtin, ALP

1942

From July 'Aboriginal natives' of Australia became eligible for pension if they were not subject to a state law 'relating to the control of Aboriginal natives' or if they lived in a state where they could not be exempt from such laws but were of eligible for pension on the grounds of 'character, standard of intelligence and development'. Pacific Islanders known as 'Kanakas' were also made eligible.

Pension became exempt from income tax.

Curtin, ALP

1943

From April:

funeral benefits of up to ten pounds were introduced.

Wife's allowance of 15 shillings per week was introduced for wives of incapacitated age pensioners where she lived with him, was his legal wife and did not receive a pension in her own right.

Curtin, ALP

1944

From April cost of living adjustments of the pension rate were discontinued.

Curtin, ALP

1947

From July:

the Old-Age Pension was renamed the Age Pension.

specific racial disqualifications other than those referring to Aboriginal Australians were removed.

Wife's allowance became payable to de facto wives who had lived with the pensioner for at least three years.

Chifley, ALP

1950

From August a pensioner medical service providing free general practitioner services and some medicines was introduced.

Menzies, LIB-CP

1952

From September residence requirements were eased so that where a claimant had resided in Australia for periods totalling 18 years they could be deemed to have been resident during occasional absences totalling two years plus six months for each year of residence in excess of 18 years.

From November access to the pensioner medical service was limited to pensioners with income under two pounds per week.

Menzies, LIB-CP

1958

From October Supplementary Assistance was introduced (see p. 43 for details).

Menzies, LIB-CP

1960

From September all aboriginal people other than those who were 'nomadic or primitive' became eligible for pension.

Menzies, LIB-CP

1962

From March the residence requirement was modified. Ten years continuous residence at any time qualified a person for pension. Where continuous residence was at least five years, the ten year requirement was reduced by all periods of residence totalling in excess of ten years.

Menzies, LIB-CP

1963

From September rates of payment were reorganised so that a standard rate was paid to unmarried people and a married rate was paid to married people.

Menzies, LIB-CP

1964

From October a telephone rental concession for pensioners was introduced. A one third reduction in telephone rental was made available to pensioners living alone, with other pensioners or with other low-income people.

Menzies, LIB-CP

1965

From October:

Wife's allowance was made available to the wife of any age pensioner whose wife did not qualify for pension in her own right.

pensioners whose wife received a Wife's allowance were paid at the standard rate.

funeral benefit of up to twenty pounds was introduced for pensioners responsible for the funeral of a pensioner, a dependent child or a spouse.

Menzies, LIB-CP

1966

From January all age pensioners were eligible for the Pensioner Medical Service without a separate means test.

Menzies, LIB-CP

1966

From September:

'aliens' were no longer disqualified from receiving an AP.

Aboriginal people were no longer disqualified from receiving an AP if they were living a 'nomadic or primitive' life.

Holt, LIB-CP

1968

From September:

married age pensioners were eligible for the standard rate where their spouse was receiving unemployment or sickness benefit.

the surviving member of a pensioner couple continued to receive the equivalent of two married rate pensions for twelve weeks after the death of their spouse.

Gorton, LIB-CP

1969

From September pension continued to be paid during an absence from Australia of up to thirty weeks.

Gorton, LIB-CP

1970

From March married pensioner couples separated by illness were eligible for the standard rate.

Gorton, LIB-CP

1971

In April and September rate increases were given only to full rate pensioners and those receiving a pension reduced by fifty cents or less.

McMahon, LIB-CP

1972

From April:

rate increases were again given to all pensioners and those who had missed out in 1971 were given catch up rises.

Wife's allowance was replaced by Wife's Pension (WfP) paid at the married rate and subject to the means test.

McMahon, LIB-CP

1973

From May pensions granted in Australia could be paid in any country in which the pensioner lived.

From July AP was subject to income tax.

Whitlam, ALP

1974

From March AP could be paid to people living outside of Australia, provided the claimant had lived in Australia for an aggregate of 30 years, had been within five years of age pension age when they left Australia, had left before 8 May 1973 and was in need of financial assistance.

From November the requirement that a pension could only be paid where the claimant was of 'good character' and 'deserving of a pension' was removed.

Whitlam, ALP

1977

From May AP rates were automatically increased twice yearly. In May they were increased in line with movements in the Consumer Price Index (CPI) in the six months to the preceding December. In November they were increased in line with movements in the CPI in the six months to the preceding June.

Fraser, LIB-NCP

1978

From November indexation of the rate of pension was conducted once a year in November in accordance with movements in the CPI between the previous two June quarters.

Fraser, LIB-NCP

1979

From November twice yearly indexation of the rate of pension was restored using the same method that had been used prior to November 1978.

Fraser, LIB-NCP

1984

From June the term 'de-facto spouse' replaced the term 'dependent female' in the legislation.

From November the pension rates were increased even though the CPI had fallen in the relevant quarters.

Hawke, ALP

1985

From September residency requirements were modified so that a claimant had to have been resident for ten years at least five of which had to be for a continuos period.

Hawke, ALP

1986

From November:

the timing of automatic indexation of payment rates in line with movements in the CPI was deferred by six weeks. Indexation occurred on 13 December and 13 June of each year rather than 1 November and 1 May.

the rate of DSS pension payable to a recipient of a war widow's pension was frozen. New grants were paid at the rate of $60.05 per week subject to the income and assets tests

Hawke, ALP

1987

From October residency requirements were changed to exclude temporary residents and prohibited non-citizens.

Hawke, ALP

1989

From November the timing of indexation was brought forward in several steps of four weeks to March and September with the transition being complete by September 1990.

Hawke, ALP

1990

From January funeral benefit was replaced by a lump sum bereavement payment equivalent to 14 weeks pension payable to the surviving member of a pensioner couple. When a single pensioner died one fortnight's payment was payed to their estate.

From November a Pharmaceutical Allowance of $2.50 per week for a single pensioner and $1.25 for a married pensioner was introduced to compensate for the introduction of a $2.50 charge for each Pharmaceutical Benefits Scheme prescription. The allowance was indexed annually and was tax-free.

Hawke, ALP

1991

From January people receiving or applying for AP could be required to supply their tax file number and that of their spouse.

Hawke, ALP

1993

From September pensioners with partners in gaol or psychiatric confinement were paid at the single rate.

Keating, ALP

1995

From January refugees applying for pensions were exempt from length of residence requirements.

From July the age of eligibility for women applying for AP began to gradually rise from 60 years to 65 years. The process will take until July 2013 to complete with the eligibility age increasing by six months every two years.

Keating, ALP

1996

From July age pensioners were eligible for advance payments of pension of between $250 and $500 to assist with living or capital expenses.

Howard, LIB-NPA

1997

From September the rate of the single pension was maintained at a level equal to or greater than the annualised original, all males, total average weekly earnings figure (MTAWE). If the rate after indexation in March and September was less than the MTAWE then it was raised to that level. A sunset clause applied to this provision. It will expire on 20 September 2002.

Howard, LIB-NPA

1998

From July a pension bonus scheme for people deferring retirement and continuing to work for at least 20 hours per week was introduced. A tax free bonus payment equal to 9.4 per cent of the basic pension entitlement for each year of deferral up to a maximum of five years was to be paid when the pension was received.

From November the Invalid Pension (IP) was payable to people who were aged 16 years and over and were permanently incapacitated for work due to an accident or invalidity. An examination by a medical practitioner was required.

Groups excluded from eligibility were those living overseas, 'aliens', overseas born 'asiatics', and 'aboriginal natives' of Australia, Africa, The Pacific Islands or New Zealand.

Applicants for IP were required to:

be residing in Australia when claiming a pension

have continuously resided in Australia for at least five years (absences of up to one tenth of the total period of residence were not taken to interrupt the continuity of residence)

have been permanently incapacitated while in Australia

forgo pension if the incapacity was not self induced nor caused in order to obtain a pension

have no claim for maintenance or compensation on account of their accident or invalidity, and

Pensions could be suspended or paid to institutions, organisations or other persons where a pensioner was considered unfit to be entrusted with a pension.

Pension could not be paid to inmates of benevolent asylums or charitable institutions, however payments were made to the institution as 'act of grace' payments. Inmates of asylums for the insane had their pension suspended until they were discharged, at which point they received a back payment of up to four weeks pension for the period they were in the asylum.

The pension was paid subject to a means test. The value of property, both real and personal, owned by a pensioner could not exceed 310 pounds and applicants were not permitted to deprive themselves of property in order to qualify for the pension. Where the value of the property of a single pensioner included their residence and exceeded 100 pounds, pension was reduced by one pound for every ten pounds of value in excess of 100 pounds. Where the property did not include their residence or that residence produced income, pension was reduced by one pound for every ten pounds of value in excess of 50 pounds. The pensions of members of couples were reduced in the same way but the amounts above which pension was reduced were halved to 50 pounds and 25 pounds respectively.

Income over 26 pounds per annum reduced the amount of pension payable on a pound for pound basis. The rate of pension was initially 26 pounds per annum, so a pensioner's total income could not exceed 52 pounds per annum under these rules. Each member of a pensioner couple was deemed to receive half of the couple's total income and own half of the couple's total property.

Fisher, ALP

1912

Naturalised residents no longer had to wait three years to be eligible for pension.

Permanently blind people became eligible for IP regardless of capacity to work but were deemed to be receiving reasonable wages. This allowed some working blind people to receive IP and encouraged work by those able to perform it.

People permanently blind or incapacitated by a birth defect were able to claim IP if they had come to Australia before the age of 3 years.

Fisher, ALP

1916

From October an institutional pension was paid to pensioners in benevolent asylums, equal to the difference between the 'act of grace' payment to the institution and the rate of IP.

Hughes, ALP

1923

From September:

institutional pension was made payable to those becoming eligible after admission to benevolent asylums. It was also paid to pensioners in hospital for more than 28 days.

blind people and people incapacitated by a birth defect, who were not born in Australia, became eligible for IP after 20 years continuous residence in Australia.

Bruce-Page, Nationalist-CP

1926

Indians born in British India became eligible for pensions.

Bruce-Page, Nationalist-CP

1931

From July pension rates were reduced, as part of the financial emergency measures taken during the Depression.

Scullin, ALP

1933

From October the rate of pension began to be annually reviewed based on the retail price index.

Lyons, UAP

1937

From September annual review of pension rates ceased.

Lyons, UAP-CP

1940

From December automatic quarterly rate adjustment based on the retail price index commenced.

Menzies, UAP-CP

1941

From December:

all 'asiatics' who were British subjects became eligible for pension.

a legislative measure of incapacity to work was introduced. Where a person's capacity for work did not exceed 15 per cent they were deemed permanently incapacitated and therefore eligible for IP.

assessment for IP eligibility began to include assessment for vocational or rehabilitation training. A pension was paid while such training was undertaken.

Curtin, ALP

1942

From July:

pension was no longer suspended when a pensioner entered hospital.

'Aboriginal natives' of Australia became eligible for pension if they were not subject to a state law 'relating to the control of Aboriginal natives' or if they lived in a state where they could not be exempt from such laws but were of eligible for pension on the grounds of 'character, standard of intelligence and development'. Pacific islanders known as 'Kanakas' were also made eligible.

pension became exempt from income tax.

Curtin, ALP

1943

From April wife's allowance of 15 shillings per week was introduced for wives of invalid pensioners where she lived with him, was his legal wife and did not receive a pension in her own right.

Curtin, ALP

1944

From April:

cost of living adjustments of the pension rate were discontinued.

pensioners who were imprisoned had their pension suspended rather than cancelled. The pension could be paid instead to a dependent wife or child.

Curtin, ALP

1946

Claimants for IP who were adequately maintained by their parents and were aged 21 years or more were made eligible for IP.

Chifley, ALP

1947

From July:

specific racial disqualifications other than those referring to Aboriginal Australians were removed.

eligibility was broadened so that incapacity or blindness that occurred during temporary absence from Australia did not disqualify a claimant. Any incapacity that had occurred outside of Australia did not disqualify a claimant if they arrived in Australia before the age of three years or had resided continuously in Australia for 20 years.

Chifley, ALP

1948

From October IP was paid to people undertaking treatment or vocational training. A training allowance and living away from home allowance could also be paid.

Chifley, ALP

1950

From July Tuberculosis Allowance replaced IP for people with tuberculosis. A means test applied and the rate was three pounds twelve shillings and six pence for a single person or six pounds ten shillings for a couple.

From August a pensioner medical service providing free general practitioner services and some medicines was introduced.

Menzies, LIB-CP

1951

From October people aged 16 to 20 years maintained by their parents were made eligible for rehabilitation.

Menzies, LIB-CP

1952

From September residence requirements were eased so that where a claimant had resided in Australia for periods totalling 18 years they could be deemed to have been resident during occasional absences totalling two years plus six months for each year of residence in excess of 18 years.

Menzies, LIB-CP

1953

From October benevolent asylums were referred to as benevolent homes.

Menzies, LIB-CP

1954

From October the means test for permanently blind people was removed.

Menzies, LIB-CP

1955

From November access to the pensioner medical service was limited to pensioners with income under two pounds per week.

Menzies, LIB-CP

1958

From October Supplementary Assistance was introduced (see p. 43 for details).

Menzies, LIB-CP

1960

From September all Aboriginal people other than those who were 'nomadic or primitive' became eligible for pension.

Menzies, LIB-CP

1962

From March the residence requirement was modified. Permanent incapacity or blindness which occurred outside of Australia did not disqualify a person from eligibility for IP if continuous residence at any time exceeded ten years. Where continuous residence was at least five years, the ten-year requirement was reduced by all periods of residence totalling in excess of ten years.

Menzies, LIB-CP

1963

From September rates of payment were reorganised so that a standard rate was paid to unmarried people and a married rate was paid to married people.

Menzies, LIB-CP

1964

From October a telephone rental concession for pensioners was introduced. A one third reduction in telephone rental was made available to pensioners living alone, with other pensioners or with other low-income people.

Menzies, LIB-CP

1966

From January all age pensioners were eligible for the Pensioner Medical Service without a separate means test.

Menzies, LIB-CP

1966

From September:

'aliens' were no longer disqualified from receiving an Age Pension (AP).

Aboriginal people were no longer disqualified from receiving an AP if they were living a 'nomadic or primitive' life.

a pensioner leaving a psychiatric hospital became eligible for a back-payment of 12 weeks pension.

Holt, LIB-CP

1967

From June Sheltered Employment Allowance (SEA) was introduced. People engaged in sheltered employment were eligible. SEA was paid at the same rate as IP but the means test was structured to allow for earnings. Earnings above $10 per week for a single person or $17 per week for a married person reduced SEA by one dollar for every two dollars earned.

Holt, LIB-CP

1968

From September:

married pensioners were eligible for the standard rate where their spouse was receiving unemployment or sickness benefit.

the surviving member of a pensioner couple continued to receive the equivalent of two married rate pensions for 12 weeks after the death of their spouse.

Gorton, LIB-CP

1969

Pension continued to be paid during an absence from Australia of up to 30 weeks.

Gorton, LIB-CP

1970

From March married pensioner couples separated by illness were eligible for the standard rate.

Gorton, LIB-CP

1971

In April and September rate increases were given only to full rate pensioners and those receiving a pension reduced by fifty cents or less.

McMahon, LIB-CP

1972

From April rate increases were again given to all pensioners and those who had missed out in 1971 were given catch up rises.

McMahon, LIB-CP

1973

From May pensions granted in Australia could be paid in any country in which the pensioner lived.

Whitlam, ALP

1974

From March IP could be paid to people living outside of Australia, provided the claimant had become permanently incapacitated in Australia, had left Australia before 8 May 1973 and was in financial need

From November:

the requirement that a pension could only be paid where the claimant was of 'good character' and 'deserving of a pension' was removed

people, who became permanently incapacitated for work in Australia, no longer had to satisfy a period of residence requirement

SEA recipients became eligible for an incentive allowance in lieu of supplementary allowance

Whitlam, ALP

1975

From July the Pensioner Medical Service was superseded by the introduction of Medibank. Pensioners were entitled to the full range of medical services.

Whitlam, ALP

1977

From May pension rates were automatically increased twice yearly. In May they were increased in line with movements in the CPI in the six months to the preceding December. In November they were increased in line with movements in the CPI in the six months to the preceding June.

Fraser, LIB-NCP

1978

From November indexation of the rate of pension was conducted once a year in November in accordance with movements in the CPI between the previous two June quarters.

Fraser, LIB-NCP

1979

From November twice yearly indexation of the rate of pension was restored using the same method that had been used prior to November 1978.

Fraser, LIB-NCP

1980

From November IP was payable to patients in psychiatric hospitals.

Fraser, LIB-NCP

1983

From March Rehabilitation Allowance (ReA) was introduced. It was paid at the same rates and under the under much the same conditions as IP to people undertaking a Commonwealth Rehabilitation Program. ReA could be received during the rehabilitation program and for six months after it had been completed if the recipient was unemployed. A training allowance and living away from home allowance continued to be paid.

Fraser, LIB-NCP

1984

From June the term 'de-facto spouse' replaced the term 'dependent female' in the legislation

From November the pension rates were increased even though the CPI had fallen in the relevant quarters

Hawke, ALP

1985

From September residency requirements were modified for those who were not incapacitated while an Australian resident. A claimant had to have been resident for ten years at least five of which had to be for a continuos period

Hawke, ALP

1987

From July medical impairment had to constitute the major part of an incapacity qualifying a person for invalid pension.

From October residency requirements were changed to exclude temporary residents and prohibited non-citizens.

Hawke, ALP

1988

From June eligibility for SEA was extended to participants in supported employment services.

Hawke, ALP

1990

From April IP could not be granted to people of age pension age.

From November a Pharmaceutical Allowance of $2.50 per week for a single pensioner and $1.25 for a married pensioner was introduced to compensate for the introduction of a $2.50 charge for each Pharmaceutical Benefits Scheme prescription. The allowance was indexed annually and was tax-free.

Hawke, ALP

1991

From January people receiving or applying for IP, SEA, or ReA could be required to supply their tax file number and that of their spouse.

From November:

IP and SEA were abolished and were replaced by Disability Support Pension (DSP). ReA was phased out and new entrants to rehabilitation received DSP. The non-medical factors (socio-economic and labour market) taken into account in the assessment of eligibility for IP were no longer considered under the DSP provisions except for people over 55 years of age. Eligibility for DSP depended on an inability to work based on a physical, intellectual or psychiatric impairment of at least 20 per cent as measured by impairment tables included as a schedule to the Social Security Act.

an employment entry payment of $200 was paid to DSP recipients who entered the work force.

Hawke, ALP

1993

From September pensioners with partners in gaol or psychiatric confinement were paid at the single rate.

Keating, ALP

1994

From July the Disability Wage Supplement (DWS) was introduced. DWS was a variant of DSP which was paid to people who had gained employment under the Supported Wage System administered by the Department of Human Services and Health. Under this system wages were paid to people with disabilities on the basis of their productivity. They remained eligible for DWS but their income from employment was assessed under the income test.

Keating, ALP

1995

From January refugees applying for pensions were exempt from length of residence requirements.

Keating, ALP

1996

From July pensioners were eligible for advance payments of pension of between $250 and $500 to assist with living or capital expenses.

Howard, LIB-NPA

1997

From September the rate of the single pension was maintained at a level equal to or greater than the annualised original, all males, total average weekly earnings figure (MTAWE). If the rate after indexation in March and September was less than the MTAWE then it was raised to that level. A sunset clause applied to this provision. It expires on 20 September 2002.

Howard, LIB-NPA

1998

From April revised impairment tables for assessing eligibility for DSP were introduced. They were intended to better target DSP to people whose impairments had a significant impact on their overall ability to work.

It was not until 1943 that an allowance was introduced for dependent wives of invalid pensioners and disabled age pensioners. It was restricted to this narrow group initially because it was targeted at wives who were carers of disabled pensioners. In 1965 those wives who cared for dependent children were given eligibility. The payment was upgraded to a pension in 1972 when the wife's pension was introduced at the same rate and under similar conditions as age and invalid pensions. All wives were given eligibility because of their perceived dependent status without the need to be carers as well. By the nineties dependency based payments for adults were becoming something of an anachronism. Female labour force participation had grown rapidly. Payments were restructured across the board to emphasise individual eligibility as carers or jobseekers. In 1995 wife pension was closed to new applicants. It and other dependency based payments began to be phased out. Over time all remaining wife pensioners will become age pensioners as they reach age pension age and the payment would cease to exist.

Income support explicitly for carers was introduced in 1983, initially for husbands caring for wives who were pensioners with disabilities. Wives caring for husbands were already entitled to the wife pension. Eligibility was soon extended to any live-in carer so that other relatives and non-relatives were covered. Eligibility has gradually been widened since the late eighties so that by 1997 the payment was available for carers of any severely disabled person whether they lived-in or not. The number of carer pensioners has increased as a result of this eligibility extension and the phasing out of payments such as wife pension.

From July a wife's allowance was payable to the wife of a man receiving Invalid Pension (IP) or Age Pension (AP) who was permanently incapacitated for work. She had to be his legal wife, be living with him and not receiving another pension. No age, character, nationality or length of residence requirements were imposed. The allowance could not be paid were the husband was in a benevolent asylum or psychiatric hospital. The rate of payment was 15 shillings per week and the pension means test applied. For details of the changes to the means test over time see the chapters on Age Pension or Invalid Pension above.

Curtin, ALP

1947

From June:

the allowance was payable to 'dependent females'. They were defined as a woman who had lived with a man as his wife on a permanent and bone fide domestic basis without being married for at least three years.

the allowance was payable where the husband was in a benevolent asylum provided the wife was at least 50 years of age or had custody of a child under 16 years of age.

Chifley, ALP

1963

From September the rate of allowance was increased to bring it into line with the additional benefit paid to the dependent wife of an unemployment or sickness beneficiary.

Menzies, LIB-CP

1965

From October eligibility was extended to the wife of any age or invalid pensioner where she had a child under 16 years of age.

Menzies, LIB-CP

1968

From September a wife allowance recipient whose husband died received the equivalent of his pension and her own allowance for twelve weeks after his death.

Gorton, LIB-CP

1972

From September wife's allowance was replaced by Wife Pension (WfP) which was paid at the married rate of pension and paid to the wife of an invalid or age pensioner if she was not qualified for a pension in her own right. The pension means test continued to apply.

McMahon, LIB-CP

1973

From December WfP paid to the wife of an age pensioner became subject to income tax.

Whitlam, ALP

1975

From October the de facto wife of an age or invalid pensioner no longer had to have lived with him for three years to be eligible for WfP.

Whitlam, ALP

1979

From October:

eligibility for WfP was extended to women in benevolent homes, to women who had no children in their care and to women under 50 years of age whose pensioner husband was in a benevolent home. WfP could not be paid if either wife or husband were in a psychiatric hospital.

the standard single rate could be paid to a wife pensioner where she and her husband were indefinitely separated by illness.

Fraser, LIB-NCP

1980

From November WfP was payable to the wife of a pensioner in a psychiatric hospital.

Fraser, LIB-NCP

1981

From November WfP claimants had to be resident in and present in Australia at the time of claim for the pension.

Fraser, LIB-NCP

1987

From October residency requirements were changed to exclude temporary residents and prohibited non-citizens.

Hawke, ALP

1990

From January funeral benefit was replaced by a lump sum bereavement payment equivalent to 14 weeks pension payable to the surviving member of a pensioner couple.

From November a Pharmaceutical Allowance of $2.50 per week for a single pensioner and $1.25 for a married pensioner was introduced to compensate for the introduction of a $2.50 charge for each Pharmaceutical Benefits Scheme prescription. The allowance was indexed annually and was tax-free.

Hawke, ALP

1991

From January people receiving or applying for WfP could be required to supply their tax file number and that of their spouse.

From November women aged less than 21 years without children were not eligible for WfP.

Hawke, ALP

1995

From July WfP was to be phased out. No new grants were made.

Keating, ALP

1996

From July pensioners were eligible for advance payments of pension of between $250 and $500 to assist with living or capital expenses.

Howard, LIB-NPA

1997

From September the rate of the single pension was maintained at a level equal to or greater than the annualised original, all males, total average weekly earnings figure (MTAWE). If the rate after indexation in March and September was less than the MTAWE then it was raised to that level. A sunset clause applied to this provision. It expired on 20 September 2002.

From December a Spouse Carer's Pension (CP) was introduced. It was payable to the husband of a severely handicapped age or invalid pensioner or rehabilitation allowee who required constant care and attention either permanently or for an extended period. The care had to be provided by the husband in person and in the matrimonial home. The husband could only receive CP if he was ineligible for age, invalid or service pension. The rates and conditions were the same as for Wife Pension (WfP).

Hawke, ALP

1985

From November this payment was renamed Carer's Pension and made available to anyone caring for a severely handicapped relative who was an age or invalid pensioner. The care had to be provided by the carer in person and the carer had to live in the home of the handicapped relative.

Hawke, ALP

1987

From October CP was payable only to people resident in Australia. Residency requirements were changed to exclude temporary residents and prohibited non-citizens.

Hawke, ALP

1988

From February CP could be paid to a carer who was not a relative of the person being cared for. The requirement that constant care and attention was necessary was removed. It was replaced by a stricter requirement that personal care in connection with bodily functions (including eating, toileting and medication) or that constant supervision to prevent injury to the person or others was required.

Hawke, ALP

1990

From January funeral benefit was replaced by a lump sum bereavement payment equivalent to 14 weeks pension payable to the surviving member of a pensioner couple or the carer pensioner upon the death of the person cared for. When a single pensioner died one fortnight's payment was payed to their estate.

From November a Pharmaceutical Allowance of $2.50 per week for a single pensioner and $1.25 for a married pensioner was introduced to compensate for the introduction of a $2.50 charge for each Pharmaceutical Benefits Scheme prescription. The allowance was indexed annually and was tax-free.

Hawke, ALP

1991

From January:

CP was made available to people caring for a severely handicapped person in receipt of any income support payment. Carers who lived in neighbouring dwellings to those in which the person they cared for lived were also made eligible for CP

people receiving or applying for CP could be required to supply their tax file number and that of their spouse.

Hawke, ALP

1993

From July:

eligibility for CP was extended to people caring for a person who would have qualified for a DSS payment had they satisfied the residence requirements

carers were allowed to cease care for a total of 42 days in a calender year (up from 28) and still be eligible for CP. They were also allowed to travel overseas during the periods when they were not giving caring

carers were allowed to participate in employment, education or training for up to ten hours per week

carers were allowed to accompany the person being cared for overseas for up to three months without losing entitlement

From September pensioners with partners in gaol or psychiatric confinement were paid at the single rate.

Keating, ALP

1995

From September an employment entry payment of $100 and an education entry payment of $200 were introduced for CP recipients.

Keating, ALP

1996

From March:

CP was paid for 14 weeks after the permanent institutionalisation of the person who had been receiving care.

CP was payable where the person receiving care was not receiving a social security payment.

the carer was no longer required to live in the same house or in an adjacent house to the person being cared for.

From July carer pensioners were eligible for advance payments of pension of between $250 and $500 to assist with living or capital expenses.

Howard, LIB-NPA

1997

From July:

CP was renamed Carer Payment.

the number of hours that a carer could spend in employment, voluntary work, education, or training was extended from 10 to 20 hours per week.

the number of days that a carer may temporarily cease caring in a calender year will increase from 42 to 52.

From September the rate of the single pension was maintained at a level equal to or greater than the annualised original, all males, total average weekly earnings figure (MTAWE). If the rate after indexation in March and September was less than the MTAWE then it was raised to that level. A sunset clause applied to this provision. It will expire on 20 September 2002.

Howard, LIB-NPA

1998

From January the employment entry payment was abolished.

From July:

eligibility for CP was extended to carers of profoundly disabled children under 16 years of age.

carers were to be able to cease caring for up to 63 days in a calender year and still qualify for CP

Howard, LIB-NPA

1999

The April 1998 'Staying at Home Package' included a proposal to introduce an improved system of measuring the care needs of care recipients called the Adult Disability Assessment Tool from July 1999.

The 1998 Budget included a proposal to allow eligibility for CP when the care recipient is hospitalised for up to 63 days in a calender year and the carer is actively involved in a treatment plan aimed at returning the care recipient to the home of the carer. Eligibility would also continue where the care recipient is hospitalised with a terminal illness. These measures were intended to take effect from July 1999.

The history of the Australian pension system has been dominated by the means test. A rather severe means test applied to the pensions when initially introduced. Private income above a threshold reduced pension on a pound-for-pound basis and assets above a certain amount reduced pension by one pound for every ten pounds of assets. From the beginning the family home was concessionally treated and by 1912 it was completely exempt from consideration under the means test.

The means test changed little between 1909 and 1946. During the depression of the thirties attempts were made to reduce pension expenditure by among other things reducing the rate of pension, requiring relatives to contribute to the support of aged people and attempting to recover pension paid from the estate of deceased pensioners. Many of these measures proved to be administratively unworkable partly due to the intense opposition they provoked and were repealed by the late thirties.

The Push for a Universal Age Pension

After World War II pressure for the abolition of the means test prompted a series of changes, many of which were intended to be steps on the way to its eventual abolition. The means test was criticised for excluding the thrifty from the pension and generally discouraging saving. Both sides of politics endorsed abolition or liberalisation of the means test well into the seventies. The most significant changes along the road to abolition were (see page 26 and Table 3 for a fuller explanation of the means test structure):

Substantial increases in the levels of permissible income and the property limit introduced by the Chifley Government in 1946 and 1948.

Further increases to the levels of permissible income and the property limit, an increase in the property exemption, exemption of income from property from consideration and exemption of blind pensioners from the test by the Menzies Government in 1954.

A further increase in the property limit in 1958 and the introduction of a merged means test in 1961 by the Menzies Government. The new test had no property limit, but income was deemed to be derived from property above an exempt amount of 400 pounds. That deemed income and any income not derived from property reduced the annual pension paid by one pound for every pound of income above an exempt amount.

The introduction of a tapered withdrawal rate by the Gorton Government in 1969. The annual rate of pension was reduced by only half of the amount of income above the exempt amount rather than the full amount as had been the case previously.

In 1972 the McMahon Government introduced a large increase in the level of exempt income as a prelude to abolition of the means test within three years for age pensioners aged 65 years and older.

The Whitlam Government abolished the means test for age pensioners aged 75 years and over in 1973 and for those aged 70 years and over in 1975, having matched the McMahon Government commitment before the 1972 election.

In 1976 the Fraser Government removed any consideration of assets from the means test making it an income test only.

The years 1946 to 1980 saw a steady growth in the proportion of the aged population who received age pensions as the means test was liberalised. Figure 1 shows that around 32 per cent of the aged population received an age pension up until World War II. Means test changes over the following decades saw that proportion rise to a high of 77 per cent in the late seventies. By the late eighties it had dropped back to around 60 per cent due to a major policy shift.

The Abandonment of Universalism and the Ascendancy of Targeting

In 1978 the Fraser Government began the retreat from universalism through abolition of the means test for the aged by freezing the rate of pension paid free of the income test to those aged 70 years or more. The income test was reintroduced for any additional entitlement. The process of reinstating a full means test was completed when the Hawke Government strengthened the income testing of pensions for those aged 70 years and over in 1983 and introduced an assets test in 1985. The fiscal pressures on government in the seventies and eighties reversed the trend to universalism and replaced it with a new orthodoxy called targeting. Means testing is essential in a targeted approach in order to ensure that that those most in need receive the benefit of the limited dollars available.

The Hawke and Keating Governments increased targeting through reforms to such areas as the treatment of investment income, assets testing and the handling of compensation payments. The objective was equitable treatment of all pensioners with private income no matter what the source. However between 1987 and 1993, the income testing provisions relating to investments became more and more complicated as the appearance of new investment products prompted the introduction of corresponding new income testing provisions. A review of the income and assets tests was commissioned and reported in 1994(2). The resulting reforms simplified arrangements by deeming income from investments based on the value of the investments held (see page 34-5 for details).

Further changes were introduced to moderate the tendency for means testing to produce poverty traps and disincentives to saving and self-provision. The amount of income exempt from the income test was increased substantially and an earnings credit scheme introduced in 1987.

The Means Test 1909 to 1961, The Merged Means Test 1961 to 1976, The Income Test 1976 to 1985, The Income and Assets Tests 1985 to 1998

Commencement Date

Original Enabling Legislation

Invalid and Old-age Pensions Act 1908 (No. 17 of 1908)

1909

From April the Old-Age Pension (AP) was introduced. The pension was subject to a means test as follows:

the value of property, both real and personal, owned by a pensioner could not exceed 310 pounds and applicants were not permitted to deprive themselves of property in order to qualify for the pension

where the value of the property of a single pensioner included their residence and exceeded 100 pounds, pension was reduced by one pound for every ten pounds of value in excess of 100 pounds. Where the property did not include their residence or that residence produced income, pension was reduced by one pound for every ten pounds of value in excess of 50 pounds. The pensions of members of couples were reduced in the same way but the amounts above which pension was reduced were halved to 50 pounds and 25 pounds respectively

income over 26 pounds per annum reduced the amount of pension payable on a pound for pound basis. The rate of pension was initially 26 pounds per annum, so a pensioner's total income could not exceed 52 pounds per annum under these rules. Each member of a pensioner couple was deemed to receive half of the couple's total income and own half of the couple's total property

Fisher, ALP

1910

From November Invalid Pension (IP) was introduced and paid under the same means test as AP.

Fisher, ALP

1912

From December the value of a pensioners home was excluded from consideration when assessing the value of their property. The higher level of exempt property was removed as a result of this change.

Fisher, ALP

1917

From September:

war pensions paid to dependants of deceased or incapacitated soldiers was exempted from consideration as income under the means test.

contributions to the maintenance of an invalid parent were excluded from consideration when assessing eligibility.

Hughes, Nationalist

1921

From January married blind pensioners could receive sufficient pension up to the maximum rate to bring the joint income of their family up to four pounds five shillings per week.

Hughes, Nationalist

1928

From September war pension for incapacitated soldiers became exempt income under the means test.

Bruce-Page, Nationalist-CP

1931

From July war pensions were once again counted as income under the means test as part of the financial emergency measures taken during the Depression.

From November pensioners with deposits in the Savings Bank of New South Wales could assign them to the government and have them excluded from their property value under the means test.

Scullin, ALP

1932

From October:

further emergency measures were introduced:

eligibility for pension ceased where relatives could adequately maintain the pensioner. Relatives could be required to make compulsory contributions to pensioner's maintenance.

transfers of property worth more than 100 pounds made for no consideration in the five years before claiming pension could prevent pension eligibility.

pension payed to a pensioner could be recovered from the pensioner's estate after they died.

the rate of pension payable before the income test was applied was reduced to 15 shillings per week.

These emergency measures were not fully implemented and those concerning property were repealed in April 1935.

Lyons, UAP

1933

From October sustenance and food relief provided by a State Government were excluded as income under the means test.

Lyons, UAP

1934

From June relatives could no longer be required to contribute to a pensioner's maintenance.

Lyons, UAP

1941

From December:

the property exemption for a married pensioner was raised to be the same as that for a single pensioner.

the special provisions for blind pensioners under the means test introduced in 1921 were repealed.

Curtin, ALP

1942

From July:

pensioners could no longer assign deposits in the Savings Bank of New South Wales to the government and have them excluded from consideration under the means test.

voluntary support from relatives other than parents no longer excluded people from pension eligibility.

permissible income for a blind pensioner was set at the level of the basic wage.

Curtin, ALP

1944

Permissible income for blind pensioners was set at five pounds and the link with the basic wage removed.

Curtin, ALP

1946

From August the following items were exempt when assessing the value of property under the means test:

the value of furniture and personal effects

the surrender value of any life insurance policy up to 200 pounds

the capital value of any life interest or annuity

the value of a contingent interest

the present value of a reversionary interest up to 500 pounds, and

the value of property not yet received from a deceased estate.

Permissible income under the means test was increased to one pound per week.

The upper limit on property was raised to 650 pounds.

The pension rate was reduced by two pounds for every complete ten pounds of property above 400 pounds.

Claimants for IP who were adequately maintained by their parents and were aged 21 years or more were made eligible for IP.

Chifley, ALP

1947

From July an income disregard in respect of children of ten shillings per week was introduced. Receipt of child endowment and child allowance reduced this disregard by the full amount received.

Chifley, ALP

1948

From October the amount of AP payable was reduced where the total amount of war, service and AP exceeded three pounds two shillings and sixpence for a single person or six pounds two shillings for a pensioner couple.

Chifley, ALP

1951

From October the income disregard in respect of children was reduced to five shillings per week and it was no longer reduced by the value of any child endowment and child allowance received.

Menzies, LIB-CP

1953

From October:

the permissible income for a single pensioner was raised to two pounds per week. It was raised to two pounds ten shillings for wife's allowance and married pensioners whose wife was not a pensioner.

the pension was now reduced by one pound for every complete ten pounds of property between 150 pounds and 450 pounds and by two pounds for every complete eleven pounds between 450 pounds and 1250 pounds.

Menzies, LIB-CP

1954

From October:

the means test for permanently blind people was removed.

income from property became exempt under the means test.

the pension was now reduced by one pound for every complete ten pounds between 200 pounds and 1750 pounds.

Menzies, LIB-CP

1955

From October the limit on the total amount of age pension and war pension was removed and war pension only counted as income under the means test.

Menzies, LIB-CP

1961

From March a merged means test was introduced. It superseded the separate tests on income and property. One pound for every ten pounds of property above 200 pounds was added to the annual income of pensioners to produce an amount of 'means as assessed'. Where means as assessed exceeded 182 pounds per annum the annual rate of pension was reduced by the excess.

Menzies, LIB-CP

1967

From June Sheltered Employment Allowance (SEA) was introduced. People engaged in sheltered employment were eligible. SEA was paid at the same rate as IP but the means test was structured to allow for earnings. Earnings above $10 per week for a single person or $17 per week for a married person reduced SEA by one dollar for every two dollars earned.

Holt, LIB-CP

1969

From September:

the means test was adjusted so that only half of the amount of means as assessed was deducted from the annual rate of pension. The means test became known as the 'tapered means test'. The unadjusted means test was retained for determining eligibility for funeral benefit, the pensioner Medical Service and fringe benefits.

SEA became subject to the pension means test.

Gorton, LIB-CP

1972

From September pensioners receiving superannuation pensions or annuities received concessional treatment under the means test. Their superannuation could be treated as a property value determined by conversion factors which related to their age. This was only done where it was to the pensioner's advantage.

McMahon, LIB-CP

1973

From September the means test was abolished for those aged 75 years or more.

Whitlam, ALP

1975

From May the means test was abolished for those aged 70 to 74 years.

Whitlam, ALP

1976

From November the means test was replaced by an income only test. Assets were no longer taken into account but any income derived from those assets was included under the income test. Concessional treatment of superannuation pensions was discontinued. Where a pensioner deprived themselves of property or income in order to receive a pension they were no longer refused a pension. Instead the disposed of income could be deemed to be income received by the pensioner.

Fraser, LIB-NCP

1978

From October the rate of pension paid free of the income test to those aged 70 years or more was frozen at $51.45 for a single pensioner and $42.90 for a married pensioner. Higher rates of payment could be received if they qualified under the income test. Blind pensioners were not affected by this change.

Fraser, LIB-NCP

1983

From November:

the income test free component of the pension for those aged 70 years or older was subject to a special income test. Where income exceeded $200 per week for a single pensioner or $333 per week for a couple the previously income test free component was reduced by fifty cents for each dollar of income above those levels.

the exemption under the income test for income from Friendly societies or trade unions was removed.

Hawke, ALP

1985

From March an assets test was introduced which applied to all income-tested pensions. The assets or income test was applied, but not both. The test giving the lower pension level was applied. The following assets were not considered under the test:

the pensioners home

special aids for disabled people

pre-paid funeral expenses

an inheritance not able to be received

awards for valour not held as investments, and

the capital value of a life interest, most annuities, contingent or reversionary interests not created by the person or gift cars provided by DVA.

The value of the assets if sold at the time of assessment, less any debt, was used. Disposal of assets without adequate return was allowed to the value of $2000 per annum for a single pensioner or $4000 for a couple. Disposal above these values resulted in the excess being assessable. The value of disposed assets being assessed was reduced by 10 per cent each year.

Hardship provisions applied where a person was considered to be in severe hardship as a result of the assets test. Under these provisions assets could be disregarded where they produced little or no income, could not be sold or could not be expected to be sold or used as security for a loan.

A pensioner loan scheme was introduced for people entitled to little or no pension due to the assets test, who did not want to sell or rearrange their assets. Provided that at least 70 per cent of their assets could not readily be converted to cash, and there was adequate security for the loan, the person could receive the pension payable if only the income test applied. The excess over the entitlement under the assets test became a debt with interest of 10 per cent per annum.

The first $120 000 of a single pensioner's assets and the first $150 000 of a pensioner couple's assets were exempt from consideration under the test. For those who owned their own home only $70 000 of assets for single pensioners and $100 000 of assets for a pensioner couple were exempt. These exemption levels were subject to annual indexation in line with the CPI. Pension was reduced by $2.00 per week for every $1000 of assets in excess of the exemption levels.

Hawke, ALP

1986

From November the rate of DSS pension payable to a recipient of a war widow's pension was frozen. New grants were paid at the rate of $60.05 per week subject to the income and assets tests

Hawke, ALP

1987

From May:

the timing of automatic indexation of assets test exemption levels was deferred by six weeks to 12 June of each year from 1 May of each year.

for new claimants for IP, Rehabilitation Allowance (ReA) and SEA, amounts equal to the pension or allowance they received were recoverable from any compensation for an incapacity to work which they received.

From July the separate income test for rent assistance was abolished.

From November:

earnings credits were introduced for all pensioners except Carer Pension (CP). Pensioners could save up unused portions of the income test free area to a limit of $1000. When income exceeded the free area the credit was reduced until totally depleted. The normal income test then applied again.

restitution payments made by the West German Government were not regarded as income under the income test.

From December separate rules for the treatment of investment income under the income test were introduced. The growth component of market linked investments made before or after 13 December 1987 was treated as income averaged over the 12 months after withdrawal. Income from accruing return investments (which produced a known rate of return) was deemed to be received throughout the period of the investment. Savings provisions applied to investments of this type entered into before 1 January.

Hawke, ALP

1988

From February 50 per cent of a lump sum settlement of a compensation claim for personal injury was deemed to be for economic loss and was recoverable where pension had been paid during the period of that economic loss.

From November:

money received from a home equity conversion loan was exempt from consideration under the income test until it reached the amount of $40 000.

the value free or subsidised board and lodgings was disregarded under the income test.

From December an 11 per cent annual rate of return was imputed to all market linked investments entered into after 9 September 1988. A lower rate could be used where evidence suggested that the product was yielding a lower return.

Hawke, ALP

1990

From January:

insurers and/or employers (including State and Territory instrumentalities) were made liable to DSS for money owed to DSS from lump sum compensation payments even where they had released to money prior to the service of a notice of charge.

compensation recovery debts could be recovered by withholdings from pension payments.

From February income from compulsorily preserved superannuation benefits was disregarded under the income and assets tests.

From April that part of an annuity or funded superannuation payment made up of return of capital was excluded from consideration under the income test.

From August a minimum interest rate (initially 10 per cent) was deemed on new loans made by pensioners.

From November a person who had a work related accident or illness was required to make a compensation claim to be eligible for any DSS payment.

Hawke, ALP

1991

From March:

the amount a pensioner could give away without triggering the deprivation provisions was increased to $10 000 per annum. The full amount of deprived assets was deemed to earn 10 per cent for five years under the income test.

a minimum interest rate was deemed on cash and deposits in financial institutions. The first $2000 was exempt from this provision. For amounts above $2000, 10 per cent interest or the actual return if higher was assessed as income under the income test. The Minister for Social Security had the power to vary the deeming rate from time to time.

From July the income test free areas were indexed annually.

Hawke, ALP

1993

From March:

assessment of income from managed investments was simplified. The categorisation into market linked investments and accruing return investments was removed. All managed investments were assessed on their actual rate of return over the previous twelve months.

losses assessed on managed investments could be offset against gains during the same period on other managed investments.

From July an earnings credit was introduced for CP recipients.

From September:

the managed investment rules were extended to shares and other securities listed on the stock exchange and acquired after 18 August 1992.

the Assets test was modified so that assets above the asset test thresholds reduced pension by $1.50 per week for every $1000.

From November non-cash credits from exchange trading systems were exempt from consideration under the income test.

Keating, ALP

1996

From January certain saved investments could be cashed in without the capital growth being assessed under the income test as a transition measure before the introduction of 'Extended Deeming'.

Keating, ALP

1996

From July a major reform of the income test treatment of financial assets was introduced. A system called 'Extended Deeming' was introduced. When assessing income under the income test, the total value of all financial assets was added together. A rate of return of 5 per cent was deemed to have been received on the first $30 000 ($50 000 for a couple) worth of assets and a rate of 7 per cent was deemed for asset holdings above these levels. The first $2000 ($4000 for a couple) was exempt from extended deeming. These rates were set at levels considered to be easily achievable using safe investments. The Minister for Social Security could vary the deeming rates as market rates changed.

Financial assets included:

bank, building society and credit union accounts

cash

term deposits

cheque accounts

friendly society bonds

managed investments

investments in superannuation funds, approved deposit funds and deferred annuities after age pension age

listed shares and securities

loans, debentures and bonds

shares in unlisted public companies

gifted assets above the allowable limits

gold and other bullion.

Financial assets did not include:

Homes, contents or other real estate

cars, boats or caravans

antiques or stamp and coin collections

investments in superannuation funds, approved deposit funds and deferred annuities before age pension age

standard life insurance policies

income streams such as superannuation pensions allocated pensions, immediate annuities or allocated annuities.

Howard, LIB-NPA

1997

From March:

the earnings credit scheme was abolished.

people becoming AP recipients after 20 March 1997 and receiving compensation on or after 20 March 1997 had the economic loss component considered in assessing their eligibility. Previously AP eligibility was not affected by compensation.

the calculation of preclusion periods due to the receipt of compensation after 20 March 1997 was altered. The compensation amount was divided by the amount above which no pension was payable to a single person under the income test. Previously the compensation amount had been divided by 'all persons average weekly earnings'.

for compensation received after 20 March 1997, the compensation preclusion period was applied only to the recipient and not to his or her spouse as had previously been the case.

the exemption under the 'extended deeming' provisions for the first $2000 ($4000 for a couple) held by a pensioner was removed.

From September:

superannuation assets were assessed under the income and assets tests where a person had been in receipt of pension for 39 weeks after reaching the age of 55 years.

farmers of age pension age were able to transfer farms and farming assets up to the value of $500 000 to the next generation without the transfer affecting their pension entitlement. The farmer needed to have a long term involvement in farming and be on a low income to qualify. This provision was to be effective only until September 2000.

Howard, LIB-NPA

1998

From September:

the treatment of income streams such as superannuation pensions, allocated pensions and annuities, and roll-over and ordinary annuities was reformed. Three categories were introduced:

income streams for life, life expectancy or at least 15 years with no access to capital and purchased after age pension age were exempt from the assets test. Under the income test a deduction based on the purchase price was applied.

other income streams with a term greater than five years but less than lifetime or life expectancy if the person was over pension age were asset tested. Under the income test a deduction based on the purchase price was applied.

short-term income streams of five years or less were asset tested. Under the income test they were treated as other financial investments.

Howard, LIB-NPA

1999

The 1998 Budget included a proposal to reform the treatment of non-economic loss compensation payments from July 1999. Lump sum payments over $10 000 would be assessed as ordinary income over the year after receipt. For periodic payments the first payment would be treated as a lump sum. Subsequent payments exceeding $2000 within a 28 day period would be see the total amount treated as ordinary income.

From quite early in the history of pension provision by the Commonwealth consideration was given to additional allowances and entitlements. As early as the 1920s payments to assist with the cost of funerals were discussed with the aim of relieving pensioners from the need to save for that last big expense. Funeral Benefit was eventually introduced in 1943 as part of a broader move towards a comprehensive welfare scheme. Its existence as a separate payment was ended in 1990 but provision for assistance with the costs of funerals is still provided through bereavement payments to surviving spouses or to the decease's estate.

Concessions for pensioners developed gradually. The earliest example was the provision of free radio licences to blind people in 1933. The Pensioner Medical Service created in 1951 provided for the first time free medical services and medicines to pensioners. Since then a range of other concessions have been added by both the Commonwealth and the State governments. Eligibility for the Commonwealth concessions came to be used by the States as a convenient eligibility test for their own concessions. As the range of concessions and the eligibility conditions expanded, the value of these concessions increased considerably as did their cost. In 1993 cost sharing arrangements were developed to allow the states to expand eligibility for their concessions to match eligibility extensions for Commonwealth concessions.

Assistance directly linked to rent payments was introduced in 1958 as a means of assisting the poorest pensioners who were entirely dependent on their pensions. It was called Supplementary Assistance at first but was renamed Rent Assistance in 1985. Over time it has been extended to all pensioners who rent in recognition of the extra costs they face compared to home owners.

From April funeral benefits of up to ten pounds were introduced to pay for the funeral expenses of deceased age pensioners and invalid pensioners.

Curtin, ALP

1947

From July funeral benefit could be paid in respect of claimants for AP or IP who would have qualified had they lived.

Chifley, ALP

1951

From October funeral benefit was payable for recipients of tuberculosis allowance if they would have qualified for AP or IP.

Menzies, LIB-CP

1965

From October funeral benefit of up to twenty pounds was payable to age, invalid or widow pensioners or wife allowance recipients who were responsible for the funeral costs of a spouse, a child or a pensioner. The rate remained at ten pounds for deceased claimants and tuberculosis allowees.

Menzies, LIB-CP

1969

From September when the tapered means test was introduced, funeral benefit for deceased pensioners who had qualified for pension only because of the new test was paid only at the lower $20 rate.

Gorton, LIB-CP

1976

From November an income only test replaced the means test for funeral benefit.

Fraser, LIB-NCP

1990

From January funeral benefit was replaced by a lump sum bereavement payment equivalent to 14 weeks pension payable to the surviving member of a pensioner couple. When a single pensioner died one fortnight's payment was paid to their estate.

Concessional rate radio licences were provided to age and invalid pensioners. These were later extended to widow pensioners and also to television licences. Eligibility was based on that for telephone rental concession as described below.

Curtin, ALP

1951

From February a Pensioner Medical Service scheme of free general practitioner medical services and medicines was established. Age, invalid, widow and service pensioners, tuberculosis allowees and their dependents were eligible to use the Service.

Menzies, LIB-CP

1955

From November a special means test limited access to the Pensioner Medical Service to those who would have qualified for a full rate pension under the income test in force at 31 December 1953. Pensioners with more income of more than two pounds per week were excluded. Tuberculosis allowees and those already enrolled were not excluded.

Menzies, LIB-CP

1964

From October telephone rental concession was introduced. A one-third reduction of the annual rental for a telephone was available to age, invalid or widow pensioners who lived alone, or with other eligible people or with other low-income people.

Menzies, LIB-CP

1966

From January the special means test was abolished and all pensioners were eligible to use the Pensioner Medical Service.

Menzies, LIB-CP

1969

From September following the introduction of the tapered means test, those who were eligible for pension only because of the new test were not eligible to use the Pensioner Medical Service or any other fringe benefits.

Gorton, LIB-CP

1973

From June Supporting Mother's Benefit was introduced. Recipients were eligible for telephone rental concession but not to use the Pensioner Medical Service.

From September eligibility for the Pensioner Medical Service and fringe benefits was restricted to pensioners with means of less than $1716 per annum ($2990 for a couple).

Whitlam, ALP

1975

From July:

the Pensioner Medical Service was superseded by the introduction of Medibank. Pensioners were entitled to the full range of medical services. Free pharmaceuticals continued as under the Pensioner Medical Service and eligible pensioners were issued with a Pensioner Health Benefit Card.

the Department of Social Security Annual Report for 1974-75 mentions fare reductions available to pensioners travelling on Australian Government rail and shipping services.

Whitlam, ALP

1976

From September:

Pensioner Health Benefit Cardholders were exempt from the Health Insurance Levy introduced in October 1976. They remained entitled to standard Medibank medical and hospital cover.

the Department of Social Security Annual Report for 1975-76 mentions mail redirection concessions for pensioners and a range of concessions offered by State Governments for the first time. State concessions had however existed at least since 1972.

Fraser, LIB-NCP

1983

From January pensioners who did no qualify for a Pensioner Health Benefit Card were made eligible for concessional rate pharmaceuticals, paying $2.00 per item.

Fraser, LIB-NCP

1983

From November the basic income limits for the fringe benefits income test were indexed on a similar basis to the indexation of pension rates.

Hawke, ALP

1988

From January holders of Pensioner Health Benefit Cards were able to retain fringe benefits for three months where their income rose no more than 25 per cent above the income test limits.

Hawke, ALP

1990

From October access to free pharmaceuticals for Pensioner Health Benefit Card holders was replaced by pharmaceuticals at a concessional rate of $2.50 per item. Once expenditure per family reached $130 per annum there was no charge for additional items. A Pharmaceutical allowance was introduced to compensate pensioners for their reduced entitlements to free pharmaceuticals. The allowance was paid at the rate of $2.50 per week and indexed annually.

Hawke, ALP

1992

From July Telephone allowance was introduced to replace the telephone voucher scheme. Quarterly payments totalling $51.80 per annum were paid to pensioners who qualified for fringe benefits and were telephone subscribers.

Keating, ALP

1993

From April the separate income and assets tests for fringe benefits were abolished. All pensioners were given eligibility for fringe benefits.

Keating, ALP

1994

From July the Commonwealth Seniors Health Card (CSHC) was introduced. The card gave access to concessional prescription medicines under the Pharmaceutical Benefits Scheme, free hearing aids and certain free basic dental services. The card was available to people of age pension age who were not eligible for Age Pension (AP) for some reason such as insufficient length of residence or high asset holdings, but whose incomes would qualify them for AP under the income test.

Keating, ALP

1995

From September Disability Support Pension (DSP) recipients could retain fringe benefits for 12 months after losing eligibility due to earnings.

Keating, ALP

1999

From January the income test for the CSHC was changed to one based on taxable income and the income limits were increased to $40 000 per annum for a single person and $67 000 for a couple. Taxable income would be adjusted to include foreign income, certain employer-provided fringe benefits and the value of net rental property losses.

Mobility Allowance (MA) was introduced for severely handicapped people in employment or vocational training who were unable to use public transport without substantial assistance. MA was tax-free and income test free. It was paid at the rate of $10 per week.

recipients had to be aged 16 years or more, be legally present in Australia and be undertaking employment or vocational training for at least 20 hours per week. MA could continue for three months after employment or training ceased. It could not be paid where a person was provided with a vehicle under the gift car scheme for veterans or had been provided with a sales tax exemption on a new vehicle during the previous two years.

Hawke, ALP

1986

From November MA was payable where the claimant performed a combination of employment and vocational training for at least 20 hours per week.

Hawke, ALP

1993

From January MA was indexed annually in line with movements in the CPI.

From March:

MA recipients could choose to take their entitlement as a lump sum advance payment equivalent to six-months of MA. They could do this once in any twelve month period.

qualification for MA was extended to people who were unable to use public transport unaided and were undertaking job search or doing voluntary work for at least eight hours per week.

Keating, ALP

1994

From May eligibility was extended to people undertaking job search activities under a Competitive Employment, Placement and Training Program (CETP).

Keating, ALP

1995

From September eligibility for MA was extended to handicapped recipients of NSA/JSA/YTA.

From October Supplementary Assistance (SA) was introduced for pensioners paying rent and having no more than ten shillings per week of private income. It was paid at the rate of ten shillings for single pensioners and married pensioners where only one spouse was receiving a payment.

Menzies, LIB-CP

1965

From October:

eligibility for SA was extended to pensioners whose wives received a wife's allowance and to single residents of benevolent homes.

the means test was altered so that SA was reduced by the amount of means as assessed in excess of 26 pounds.

Menzies, LIB-CP

1968

From September married age or invalid pensioners, whose spouses were receiving benefits, became eligible for SA.

Gorton, LIB-CP

1970

From March married pensioners who had to live apart due to illness became eligible for SA.

Gorton, LIB-CP

1974

From November:

the amount of SA was restricted to the amount of rent actually paid.

SA for sheltered employment allowees was replaced by Incentive Allowance. The new allowance was paid at the rate of $5 per week and was means test free.

Whitlam, ALP

1982

From February the maximum rate of SA became either $8 per week or one half of the amount by which rent paid or payable was more than $10 per week, whichever was the lower. Tenants of government housing authorities ceased to be eligible.

Fraser, LIB-NCP

1984

From March SA was no longer subject to income tax.

Hawke, ALP

1985

From September Supplementary Assistance was renamed Rent Assistance (RA).

Hawke, ALP

1986

From December the rent threshold above which RA was payable was increased to $15 per week.

Hawke, ALP

1987

From July the separate income test on RA was abolished and RA was means tested under the pension income test.

From December RA for families with children was paid as part of Family Allowance Supplement (FAS).

Hawke, ALP

1989

From June:

a $5 per week payment was added to RA for those with children.

ex-prisoners were able to reduce the waiting period by the length of time they spent in prison.

the rent threshold above which RA was payable was raised to $20 per week.

those paying for board and lodgings had only two-thirds of their payment counted as rent.

From December the maximum rate was standardised across all pensions, benefits and family allowance supplement.

Hawke, ALP

1990

From June a higher rate was introduced for those with three or more children.

Hawke, ALP

1991

From March:

the rent threshold above which RA was paid was increased to $25 per week.

twice yearly indexation in line with movements of the CPI was introduced for the rate of RA.

Hawke, ALP

1993

From March:

the rent threshold above which RA is payable was indexed and set at levels which varied according to family situation. For single people with no children the threshold was $60 per fortnight, for single people with children $80 per fortnight, for couples without children $100 per fortnight and for couples with children $120 per fortnight.

above the new thresholds RA was paid at the rate of 75 cents for each dollar of rent paid up to the maximum amount.

Keating, ALP

1996

From March the following changes occurred:

maximum rates of RA were increased by $5 per fortnight for families with children

the minimum amount of rent that must be paid to receive RA was raised by $5, and

people receiving RA under various savings provisions resulting from previous changes in RA conditions had their rate frozen until general rates caught up to their higher saved rate.

Howard, LIB-NPA

1997

From July single people sharing accommodation were eligible for a maximum rate of RA which was two thirds of the maximum rate payable to other people receiving RA. People receiving Carer Payment (CP) or Disability Support Pension (DSP) were exempt from this change.

Howard, LIB-NPA

1998

From January people who lived in public housing but were not the primary tenant were to be excluded from eligibility for RA. Exemptions applied where the primary tenant was unsubsidised or where the State Housing Authority had been notified of the sub-tenants presence and their income had been taken into account in setting the rent for the household.

The provision of income support for the aged, those with disabilities, their wives and carers in Australia has developed in a slow evolutionary manner for much of the twentieth century. The rate of change and the broad direction of change have been governed more by social and demographic developments than by any grand plan. Each payment has evolved and been transformed by small changes to eligibility and means testing. That is not to say that there have been no major reviews looking at the area; on the contrary such exercises have been repeated regularly during the period. However, once the general features of the pension system were in place they proved extremely resistant to radical change. Hence all attempts to introduce public contributory or earnings related schemes have failed. Australia has remained firmly attached to broad parameters of the means tested flat rate and publicly funded scheme introduced in 1909.

The growth of private superannuation in the last 15 years has so far made it a supplement to the government pension scheme rather than a replacement. The rate of change in income support policy has accelerated through the last two decades of the twentieth century and shows no signs of slowing. However it seems likely that social and demographic forces will continue to the major driving force behind policy development.